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Abolish Review and Approval Requirements and Streamline Review and Approval Procedure to Continuously Enhance Tax Payers’ Sense of Gain
SAT’s Measures for the Administration of Registration of General Tax Payers of Value-added Tax

Issuance Date: January 19, 2018 Source: General Office of the State Administration of Taxation


The report delivered at the 19th CPC National Congress stressed it’s imperative to transform government functions, streamline administration and delegate power more effectively and innovate supervisory methods. For the purpose of thoroughly implementing the related requirements from the reform of “delegation, regulation and service” and further improving tax service, the State Administration of Taxation (SAT) recently revised the Measures for the Administration of Determination of Qualification of General Tax Payers of Value-added Tax and issued the Measures for the Administration of Registration of General Tax Payers of Value-added Tax (“the Measures”) to specify the related policies on the registration of general tax payers of value-added tax. The Measures shall come into effect on February 1, 2018.


Change from review and approval to registration: “instantly becoming” general tax payers


The VAT tax payers can be divided into general tax payers and small-scale tax payers. For the latter, they can’t use the special VAT invoices for the withholding purpose even after they complete the purchase of goods, labor, services, intangible assets and immoveable properties. But once small-scale tax payers become general tax payers, they can issue the special VAT invoices to provide clients with withholding vouchers, and use the withholding mechanism of VAT chain to withhold input tax from output VAT.


The qualification of general tax payers used to be examined as the part of the tax authorities’ administrative review and approval items. Tax payers should file an application to the local tax authorities in the places where they’re located. The right to examine the qualification of general tax payers shall fall within the SAT’s offices at the county (municipal and district) level or the taxation bureaus at the same level.


To actively promote the reform of “delegation, regulation and service”, the State Council printed and issued the Decision on Abolishing and Adjusting a Batch of Administrative Review and Approval Items in February 2015 to list “the determination of qualification of general tax payers of value-added tax” as the part of abolished administrative review and approval items. For the sake of implementing the decision by the State Council timely, the SAT designed and issued the Announcement of the State Council on Adjusting the Issues Concerning the Administration of General Tax Payers of Value-added Tax. As a transitional regulation, this Announcement specifies that the administration of general tax payers will change from review and approval system to registration system since April 1, 2015.


Based on the original transitional regulations, the new Measures will take the form of department rules to further clarify the revocation of review and approval procedure for general tax payers by tax authorities, and the review and approval system will be changed to the registration system. Tax payers can gain the qualification as general tax payers after the competent tax authorities check the registration materials and information submitted by tax payers.


According to Fan Yong, Professor of the Central University of Finance and Economics, the registration system will be applicable to the qualification of general tax payers after the administrative review and approval requirements are removed. In this way, tax payers can regain right and responsibility and have their burdens reduced. This will contribute to creating a business environment friendly to innovation and entrepreneurship and further stimulating market vitality.


Streamline procedures in two ways: a more enjoyable experience


“The change from review and approval system to registration system in terms of the qualification of general tax payers will help require fewer tax service-related materials, shorten tax service time and improve experience in tax service.” As the SAT’s leaders concerned said, after the new Measures is issued, the tax authorities will further change its mode of administration, and achieve the seamless connection between abolishing the administrative review and approval requirements for general tax payers and strengthening ex-post supervision to ensure the earnest implementation of the policies on registration administration of general tax payers.


The new Measures streamline the review and approval procedure in two ways, namely streamlining tax service materials and tax service procedure so that the registration of general tax payers becomes more accessible and time-saving.


- Streamline tax service materials: According to the previous review and approval system, tax payers should submit the Application and Confirmation Form of the General Tax Payers of Value-added Tax to the competent tax authorities for the confirmation of their qualification as general tax payers if tax payers’ annual taxable sales amount is higher than the standard for small-scale tax payers, but they should also provide five other materials including the copy of Tax Registration Certificate, the identification credentials of financial leaders and tax service personnel as well as their copies if tax payers’ annual taxable sales amount is not higher than the standard for small-scale tax payers and tax payers are the new tax payers.


After the registration system is put into force, the tax service-related materials required of general tax payers are reduced from six items to two items and tax payers can handle the registration formalities for general tax payers only by providing Tax Registration Certificate and completing registration form.


“We’ve also offered the ‘form-free service for general tax payers of value-added tax’. Only with Tax Registration Certificate, public seals and seals of legal persons, tax payers can have all the required information entered in computer system by the window service personnel. They save the trouble of complete relevant materials manually.” The leader from tax service hall of the SAT’s Dalian Zhongshan District Office.


- Streamline tax service procedure. In the previous review and approval system, when tax payers applied for the qualification as general tax payers, the review and approval results were required to be submitted to higher leadership for approval because different departments in tax authorities were responsible for different parts of review and approval procedure. The whole review and approval procedure is required to be completed within 20 workdays. What’s more, the competent tax authorities should conduct field inspection and prepare inspection reports after the applications filed by tax payers were accepted.


The new Measures has removed the requirement for field inspection. The competent tax authorities can check the materials from tax payers on site. As long as the registration requirements are met, the whole review and approval procedure will be completed on site. However, the tax authorities will require tax payers to provide additional or corrected contents if the requirements for filling the forms aren’t meet or the contents of form mismatch tax registration information.


“After the registration system applies to the confirmation of tax payers’ registration according to the new Measures, tax payers can handle the whole issue only with Tax Registration Certificate and official seals. We can save lots of troubles since we needn’t submit so many materials and wait for the review and approval result”. Li Lu, a financial leader from Anhui Huangshan Tunxi Baijia Qianwei Catering Co., Ltd. talked about the new changes after the tax authorities streamline administration and delegate power.


Adaptation to the reform of tax system: more scientific administration of registration work


The new Measures redefines the annual taxable sales amount, the sales amount in the tax return, sales amount added upon audit, sales amount adjusted upon tax assessment. According to the new Measures, if tax payers have the deduction items in sales service, intangible assets or immovable properties (“taxable conducts”), the annual taxable sales amount for their taxable conducts should be calculated according to the pre-deduction amount. The occasional sales amount from sales of intangible assets and transfer of immovable properties shouldn’t be included as the annual taxable sales amount for taxable conducts.


“The new Measures redefines and specifies some concepts so that a more effective connection is forged with the reform of tax system like VAT pilot program.” Hu Yijian, Professor of Shanghai University of Finance and Economics, pointed out. The new calculation method of taxable sales amount is more definite, scientific and reasonable.


To match the quarterly tax declaration by small-scale tax payers of value-added tax, the new Measures includes the terms about the calculation period of annual taxable sales amount. It specifies the quarterly calculation of annual taxable sales amount and requires tax payers to choose the first day of the month or the first day of the next month as the effective date of general tax payers when they go through the registration formalities.


“When tax payers are granted greater autonomy by the new Measures, a higher requirement is raised for the tax authorities’ subsequent administration work.” As Cui Xiaoyu, Chief Economists of Jiangsu Changzhou Municipal Office, SAT, said, the tax authorities should delegate all the powers that need delegating and take responsibility for all the administration work that needs controlling. In this way, the honest tax payers can gain more favorable treatments and the dishonest tax payers will confront much trouble so as to help tax payers reduce tax-related risks and create a more healthy and credible business environment.


“Abolishing the administrative review and approval procedure doesn’t mean a let-alone policy. The new Measures is intended to deepen the administrative review and approval system in tax authorities and reinforce the intermediate and ex-post administration.” The leader from the SAT’s Goods and Services Tax Department said that tax authorities will further regulate the registration administration work of general tax payers of value-added tax, earnestly reduce the tax payers’ tax service burden and provide them with more tangible sense of gain by strengthening guidance to service, performing effective regulation and perfecting social supervision.

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